Considering health damages and co-benefits in climate change policy assessment
Authors: Thomas Longden, Tom Kompas, Richard Norman, Sotiris Vardoulakis
Journal: The Lancet Planetary Health (2022)

In early 2021, US President Joe Biden signed an executive order to revise the social cost of carbon estimate used by the US Government. The social cost of carbon is a monetary estimate of the harms of climate change that can be applied when developing policy and making decisions on fossil fuel extraction, infrastructure projects, and emissions reductions.Using a higher social cost of carbon in the USA has been the subject of recent court rulings. In February, 2022, a federal judge in Louisiana blocked the Biden administration from using a higher social cost of carbon of US$51 per tonne of CO2 (compared with the $7 per tonne of CO2 used by the Trump administration).1Joselow M Court ruling on social cost of carbon upends Biden's climate plans. The Washington Post.https://www.washingtonpost.com/climate-environment/2022/02/21/social-cost-of-carbon-biden/Date accessed: July 1, 2022Google Scholar Although the US Supreme Court has now allowed the higher social cost of carbon to be used,2Stohr G Biden's climate costs for major projects survive court challenge. Bloomberg.https://www.bloomberg.com/news/articles/2022-05-26/supreme-court-allows-biden-to-keep-using-climate-cost-estimatesDate accessed: July 1, 2022Google Scholar other court challenges are targeting climate change policies.3Joselow M Supreme Court's EPA ruling upends Biden's environmental agenda. The Washington Post.https://www.washingtonpost.com/climate-environment/2022/06/30/epa-supreme-court-west-virginia/Date accessed: July 1, 2022Google ScholarKey components of calculating the social cost of carbon are damage functions that model the impacts of climate change.4Nordhaus WD Revisiting the social cost of carbon.Proc Natl Acad Sci USA. 2017; 114: 1518-1523Crossref PubMed Scopus (441) Google Scholar Damage functions have been part of many assessments of the potential effects of climate change using integrated assessment models (IAMs). A well known example is Professor Nicholas Stern's The Economics of Climate Change.5Stern N The economics of climate change.Am Econ Rev. 2008; 98: 1-37Crossref Scopus (725) Google Scholar Stern has stated that inadequate modelling of human wellbeing and loss of life was one reason that IAMs provide social cost of carbon estimates that "are often way too low".6Stern N Economics: current climate models are grossly misleading.Nature. 2016; 530: 407-409Crossref PubMed Scopus (164) Google Scholar Others argue that the damage functions used by IAMs are highly unknowable and that carbon pricing should instead be based on the marginal cost of abating emissions.7Pezzey JCV Why the social cost of carbon will always be disputed.Wiley Interdiscip Rev Clim Change. 2019; 10: e558Crossref Scopus (24) Google ScholarStandard damage functions in existing IAMs rarely capture the heterogeneity in damages across countries and within countries. For example, a 2018 study using limited damage functions (mainly losses in agricultural and labour productivity from heat stress) found that if the global surface temperature increases by 4°C by 2100, the effect on gross domestic product (GDP) would be most severe in parts of Africa (eg, GDP would decrease by an estimated 27% in Togo), followed by southeast Asia (eg, estimated decrease of 21% in the Philippines), and south Asia (eg, estimated decrease of 15% in India).8Kompas T Pham VH Che TN The effects of climate change on GDP by country and the global economic gains from complying with the Paris Climate Accord.Earths Futur. 2018; 6: 1153-1173Crossref Scopus (68) Google Scholar By contrast, GDP would decrease by less than 1% in the USA, Canada, and central and northern Europe.8Kompas T Pham VH Che TN The effects of climate change on GDP by country and the global economic gains from complying with the Paris Climate Accord.Earths Futur. 2018; 6: 1153-1173Crossref Scopus (68) Google Scholar Another relevant example is the finding that climate zones are a key determinant of the proportion of mortality associated with extremely hot and cold temperatures.9Longden T The impact of temperature on mortality across different climate zones.Clim Change. 2019; 157: 221-242Crossref Scopus (9) Google ScholarDisaggregating market and non-market climate damages by region and sector was a recommendation for the Interagency Working Group on the Social Cost of Carbon.10National Academies of Sciences, Engineering, and MedicineValuing climate damages: updating estimation of the social cost of carbon dioxide. The National Academies Press, Washington, DC2017Google Scholar Regional and subnational damage functions would better capture the diverse range of climate change impacts, especially for human health. Although accounting for a broader set of benefits and harms will pose a substantial methodological challenge, there are outcome measures that combine mortality and morbidity effects, such as the quality-adjusted life year and disability-adjusted life year, which might be used or adapted for this purpose.An alternative to global and all-encompassing damage functions are assessments of health-based co-benefits (or win–win outcomes) that are associated with a single intervention or specific policy change. For example, studies using IAMs have found that reducing the use of coal for power generation will lead to health co-benefits that outweigh the economic cost of decarbonisation policies due to decreased local air pollution.11Schwanitz VJ Longden T Knopf B Capros P The implications of initiating immediate climate change mitigation—a potential for co-benefits?.Technol Forecast Soc Change. 2015; 90: 166-177Crossref Scopus (22) Google Scholar, 12Rauner S Bauer N Dirnaichner A Van Dingenen R Mutel C Luderer G Coal-exit health and environmental damage reductions outweigh economic impacts.Nat Clim Chang. 2020; 10: 308-312Crossref Scopus (56) Google Scholar A range of health issues should be considered when assessing the multiple co-benefits and potential unintended co-harms of climate policies in different sectors. For example, urban planning policies that encourage active travel (eg, walking and cycling) instead of motorised transport can reduce pollutant emissions, noise, and congestion, and help improve physical activity levels in the population.13Haines A Ebi K The imperative for climate action to protect health.N Engl J Med. 2019; 380: 263-273Crossref PubMed Scopus (353) Google ScholarOur health is valuable, and applying a social cost of carbon or calculating health-based co-benefits will improve local decisions on fossil fuel extraction, infrastructure projects, and greenhouse gas emissions reductions. In early 2021, US President Joe Biden signed an executive order to revise the social cost of carbon estimate used by the US Government. The social cost of carbon is a monetary estimate of the harms of climate change that can be applied when developing policy and making decisions on fossil fuel extraction, infrastructure projects, and emissions reductions. Using a higher social cost of carbon in the USA has been the subject of recent court rulings. In February, 2022, a federal judge in Louisiana blocked the Biden administration from using a higher social cost of carbon of US$51 per tonne of CO2 (compared with the $7 per tonne of CO2 used by the Trump administration).1Joselow M Court ruling on social cost of carbon upends Biden's climate plans. The Washington Post.https://www.washingtonpost.com/climate-environment/2022/02/21/social-cost-of-carbon-biden/Date accessed: July 1, 2022Google Scholar Although the US Supreme Court has now allowed the higher social cost of carbon to be used,2Stohr G Biden's climate costs for major projects survive court challenge. Bloomberg.https://www.bloomberg.com/news/articles/2022-05-26/supreme-court-allows-biden-to-keep-using-climate-cost-estimatesDate accessed: July 1, 2022Google Scholar other court challenges are targeting climate change policies.3Joselow M Supreme Court's EPA ruling upends Biden's environmental agenda. The Washington Post.https://www.washingtonpost.com/climate-environment/2022/06/30/epa-supreme-court-west-virginia/Date accessed: July 1, 2022Google Scholar Key components of calculating the social cost of carbon are damage functions that model the impacts of climate change.4Nordhaus WD Revisiting the social cost of carbon.Proc Natl Acad Sci USA. 2017; 114: 1518-1523Crossref PubMed Scopus (441) Google Scholar Damage functions have been part of many assessments of the potential effects of climate change using integrated assessment models (IAMs). A well known example is Professor Nicholas Stern's The Economics of Climate Change.5Stern N The economics of climate change.Am Econ Rev. 2008; 98: 1-37Crossref Scopus (725) Google Scholar Stern has stated that inadequate modelling of human wellbeing and loss of life was one reason that IAMs provide social cost of carbon estimates that "are often way too low".6Stern N Economics: current climate models are grossly misleading.Nature. 2016; 530: 407-409Crossref PubMed Scopus (164) Google Scholar Others argue that the damage functions used by IAMs are highly unknowable and that carbon pricing should instead be based on the marginal cost of abating emissions.7Pezzey JCV Why the social cost of carbon will always be disputed.Wiley Interdiscip Rev Clim Change. 2019; 10: e558Crossref Scopus (24) Google Scholar Standard damage functions in existing IAMs rarely capture the heterogeneity in damages across countries and within countries. For example, a 2018 study using limited damage functions (mainly losses in agricultural and labour productivity from heat stress) found that if the global surface temperature increases by 4°C by 2100, the effect on gross domestic product (GDP) would be most severe in parts of Africa (eg, GDP would decrease by an estimated 27% in Togo), followed by southeast Asia (eg, estimated decrease of 21% in the Philippines), and south Asia (eg, estimated decrease of 15% in India).8Kompas T Pham VH Che TN The effects of climate change on GDP by country and the global economic gains from complying with the Paris Climate Accord.Earths Futur. 2018; 6: 1153-1173Crossref Scopus (68) Google Scholar By contrast, GDP would decrease by less than 1% in the USA, Canada, and central and northern Europe.8Kompas T Pham VH Che TN The effects of climate change on GDP by country and the global economic gains from complying with the Paris Climate Accord.Earths Futur. 2018; 6: 1153-1173Crossref Scopus (68) Google Scholar Another relevant example is the finding that climate zones are a key determinant of the proportion of mortality associated with extremely hot and cold temperatures.9Longden T The impact of temperature on mortality across different climate zones.Clim Change. 2019; 157: 221-242Crossref Scopus (9) Google Scholar Disaggregating market and non-market climate damages by region and sector was a recommendation for the Interagency Working Group on the Social Cost of Carbon.10National Academies of Sciences, Engineering, and MedicineValuing climate damages: updating estimation of the social cost of carbon dioxide. The National Academies Press, Washington, DC2017Google Scholar Regional and subnational damage functions would better capture the diverse range of climate change impacts, especially for human health. Although accounting for a broader set of benefits and harms will pose a substantial methodological challenge, there are outcome measures that combine mortality and morbidity effects, such as the quality-adjusted life year and disability-adjusted life year, which might be used or adapted for this purpose. An alternative to global and all-encompassing damage functions are assessments of health-based co-benefits (or win–win outcomes) that are associated with a single intervention or specific policy change. For example, studies using IAMs have found that reducing the use of coal for power generation will lead to health co-benefits that outweigh the economic cost of decarbonisation policies due to decreased local air pollution.11Schwanitz VJ Longden T Knopf B Capros P The implications of initiating immediate climate change mitigation—a potential for co-benefits?.Technol Forecast Soc Change. 2015; 90: 166-177Crossref Scopus (22) Google Scholar, 12Rauner S Bauer N Dirnaichner A Van Dingenen R Mutel C Luderer G Coal-exit health and environmental damage reductions outweigh economic impacts.Nat Clim Chang. 2020; 10: 308-312Crossref Scopus (56) Google Scholar A range of health issues should be considered when assessing the multiple co-benefits and potential unintended co-harms of climate policies in different sectors. For example, urban planning policies that encourage active travel (eg, walking and cycling) instead of motorised transport can reduce pollutant emissions, noise, and congestion, and help improve physical activity levels in the population.13Haines A Ebi K The imperative for climate action to protect health.N Engl J Med. 2019; 380: 263-273Crossref PubMed Scopus (353) Google Scholar Our health is valuable, and applying a social cost of carbon or calculating health-based co-benefits will improve local decisions on fossil fuel extraction, infrastructure projects, and greenhouse gas emissions reductions. We declare no competing interests. We are members of the Healthy Environments And Lives National Research Network, which receives funding from the National Health and Medical Research Council special initiative in Human Health and Environmental Change (grant number 2008937).